Global Fertilizer Market Weekly Update (CW11)

Week 2 of March 2026: Middle East Tensions Reshape Raw Material Pricing - Sulfur and Urea Surge, EU Policy Signals Easing, Potash Markets Show Regional Divergence

The key theme in this week’s fertilizer market is clear: geopolitical conflict is no longer just a sentiment driver - it is now directly transmitting through shipping lanes, freight costs, booking restrictions, and spot price withdrawals into fertilizer pricing.

Following the escalation of tensions in the Middle East, the Strait of Hormuz, one of the most critical maritime corridors for fertilizer raw materials and intermediates, has become a focal point for global commodity markets. Sulfur and urea reacted first, while phosphates began to follow through the sulfur–sulfuric acid–MAP/DAP cost chain.

Potash markets have not yet experienced production disruptions but have already entered a phase where risk premiums are being priced into the market ahead of any real supply interruption.

At the same time, the European Union is considering temporarily suspending import tariffs on ammonia and nitrogen fertilizers through a quota mechanism, partly to offset the financial burden imposed by the Carbon Border Adjustment Mechanism (CBAM). If implemented, this move could reshape global nitrogen fertilizer trade flows over the coming year.

1. Key Takeaway: Fertilizer Pricing Is Shifting from Supply–Demand to Supply Chain Security

If this week’s market dynamics can be summarized in one sentence, it would be:

Supply chain security is now redefining fertilizer pricing.

Under normal market conditions, fertilizer prices fluctuate primarily based on production rates, inventories, seasonal demand, and import cycles. However, this week the decisive variables have shifted to three factors:

1. Whether shipping through the Strait of Hormuz remains stable

2. Whether major shipping companies continue expanding booking restrictions in the Middle East

3. Whether suppliers continue withdrawing spot offers amid uncertainty

These three variables together mean that fertilizer prices are no longer determined purely by production costs but by a combination of costs, logistics disruptions, and geopolitical risk premiums.

2. Sulfur Emerges as the Most Sensitive Raw Material

Among all upstream materials this week, sulfur has become the most sensitive commodity.

Sulfur is a critical raw material not only for phosphate fertilizers but also for nickel refining, lithium battery materials, and multiple chemical industries. This means that supply disruptions can quickly trigger cross-sector competition for available cargo.

From a global perspective, sulfur supply is highly concentrated:

• The Middle East accounts for approximately 42% of global sulfur production

• The region represents more than 45% of global sulfur trade

• The Strait of Hormuz carries roughly 44% of global seaborne sulfur shipments

Following the escalation of the U.S.–Iran conflict on February 28, sulfur rapidly became one of the commodities most sensitive to geopolitical developments.

In China, the spot sulfur price at Yangtze River ports has surged from 4,050 yuan/ton on February 28 to around 4,500 yuan/ton, an increase of approximately 11%.

Market sentiment is currently mixed:

• Some traders are strongly bullish due to supply uncertainty

• Others remain cautious, waiting to see whether maritime transport through Hormuz will stabilize

As of March 5, port inventories of solid sulfur in China stood at 1.621 million tons, down 16,000 tons from the previous trading day, indicating that supply tightening is already emerging.

3. Phosphate Fertilizers: MAP Prices Follow Rising Sulfur Costs

Phosphate fertilizer markets this week have been driven primarily by cost transmission from sulfur and sulfuric acid.

Production of Monoammonium Phosphate (MAP) depends heavily on sulfuric acid, which itself is largely produced from sulfur. China’s sulfur import dependency is close to 50%, and more than 56% of these imports originate from the Middle East.

As geopolitical tensions intensified, sulfur shipments from the region slowed due to:

• Reduced loading volumes

• Extended shipping schedules

• Delayed arrivals at Chinese ports

As a result, sulfur prices in Chinese ports reversed their earlier trend and began climbing rapidly after the Lunar New Year.

Consequently, MAP prices have started to follow the sulfur-driven cost increase, even though downstream fertilizer demand has not dramatically changed.

In other words, the phosphate market is currently cost-driven rather than demand-driven.

4. EU Policy Shift: Potential Suspension of Import Tariffs on Nitrogen Fertilizers

Another major development this week comes from European fertilizer policy.

The European Commission has proposed suspending import tariffs on several fertilizer products, including:

• Ammonia

• Urea

• Ammonium sulfate

• Calcium ammonium nitrate

• Various NPK fertilizers

The suspension would apply through a quota system lasting one year and would be based on 2024 most-favoured-nation import volumes, with an additional allowance equivalent to 20% of 2024 imports from Russia and Belarus.

The purpose of this policy is to compensate for the financial impact of the EU Carbon Border Adjustment Mechanism (CBAM), which entered full implementation on January 1, 2026.

If implemented, the biggest beneficiaries would be ammonia exporters from:

• United States

• Saudi Arabia

• Oman

• Qatar

• United Arab Emirates

• Libya

These suppliers currently face an import tariff of 5.5% when exporting ammonia to the EU.

Notably, Russia and Belarus will remain excluded from tariff relief, and their exports will continue facing tariffs of:

• 5.5% for ammonia

• 6.5% for urea

According to Eurostat data:

• EU ammonia imports in 2024 totalled 2.08 million tons, with Russia supplying over 528,000 tons (about 25%)

• EU urea imports reached 5.98 million tons, of which 1.72 million tons (around 29%) came from Russia

The draft proposal suggests the tariff suspension could begin May 1, 2026, although a final timeline has not yet been confirmed.

5. China’s Potash Market: Regional Divergence Intensifies

China’s potash market currently shows a strong regional divergence.

High-grade MOP remains tight

Supply of 62% potassium chloride remains tight nationwide. Limited availability of premium products has kept spot prices firm and even pushed them slightly higher in some regions.

Even though large volumes of lower-priced pre-sold futures cargoes exist, they have not yet significantly impacted the spot market due to immediate supply shortages.

Northeast China sees price corrections

In contrast, prices in Northeast China have softened slightly.

With the arrival of additional cargoes through border trade and targeted supply shipments from domestic producers, local supply conditions improved rapidly.

Large-granule red potash has seen modest price reductions, making the Northeast a regional price trough compared to other markets.

6. SOP Prices Rise on Raw Material Pressure

Unlike the mixed performance in MOP, the Sulfate of Potash (SOP) market in China continues trending upward.

The Mannheim process faces dual cost pressure:

1. High potassium chloride feedstock prices

2. Rising sulfur and sulfuric acid costs

Due to these pressures, Mannheim SOP producers have raised prices by approximately 50–100 yuan per ton.

At the same time, operating rates remain relatively low due to margin pressure, limiting supply.

Resource-based SOP producers, however, remain relatively stable because their production systems rely less on sulfur and imported raw materials.

7. Global Potash Markets: Supply Uncertainty Drives Sentiment

Globally, potash production in Jordan and Israel remains largely unaffected by the current geopolitical tensions.

However, the market is increasingly influenced by logistics risks and supply chain uncertainty.

Key concerns include:

• Rising freight costs due to Red Sea security risks

• Higher marine insurance premiums

• Potential disruptions to sulfur supply, which is critical for Mannheim SOP production

Many suppliers have temporarily withdrawn price quotations, adopting a wait-and-see approach.

8. Urea Market: The Most Dramatic Price Reaction

Among all fertilizer products, urea has experienced the most immediate price reaction this week.

Urea paper markets surged sharply after the Middle East conflict escalated.

Key price indicators include:

• CME U.S. Gulf March and April urea futures: around $500/ton

• Previous broker quotes on February 27: $440–450/ton

Middle East derivatives markets also climbed:

• March contracts: just above $500/ton

• April contracts: around $510/ton

Spot markets followed quickly.

Egyptian urea sales on March 2 were reported at approximately $520/ton FOB for North African destinations.

The reason for this sharp reaction is clear:

The Middle East represents roughly 35% of global seaborne urea trade, making the region one of the most critical export hubs.

As tensions escalate, the market is increasingly pricing in the risk that future supply could be disrupted, even before actual shortages occur.

Market Outlook

Looking ahead, three key factors will determine short-term market direction:

1. Shipping stability in the Strait of Hormuz

2. Whether Middle Eastern suppliers resume spot quotations

3. How quickly EU tariff relief policies move forward

For the global fertilizer market, pricing dynamics are clearly shifting from a traditional supply–demand framework toward a model driven by logistics, geopolitics, and supply chain resilience.

Sulfur has become the first raw material to be repriced under this new logic, urea the first finished fertilizer to react strongly, while phosphates and potash are gradually adjusting to the evolving risk environment.